The Connecticut Supreme Court has ruled that Scholastic Book Clubs, Inc. must pay the state millions of dollars in taxes and penalties. The court found that teachers in the classroom act as local salespeople for the out-of-state bookseller.
The Connecticut Supreme Court unanimously reversed a trial court judge’s decision, and ruled that Scholastic Book Clubs, Inc should pay the state more than 3 million dollars in sales tax, interest and penalties.
Scholastic Book Clubs is based in Missouri and distributes children's books through the schools. About 14,000 teachers in Connecticut participate in the program and are not compensated for their services. Scholastic argued that teachers act as surrogate parents when they help kids buy books through Scholastic.
But the state Supreme Court agreed with the Connecticut’s Department of Revenue Services which said teachers were acting as in-state representatives for the company.
In a statement on its website, DRS said the decision “marks an important step in holding out-of-state retailers to the same taxation rules as their Connecticut counterparts”.